Category Archives: trading quotes

The final blog post – concerning Ivan Drago, and an accounting of the similarities between myself and the real Caravaggio

(My main blog can be found here)

In Rocky IV, Rocky Balboa is in Apollo Creed’s corner watching Creed get absolutely pummelled by Ivan Drago, a stone cold Russian killing machine. Creed is under-trained and over-the-hill and Rocky knows it, but he can’t bring himself to dropping the towel and calling an end to the fight until it is too late – Drago delivers a literal killing blow with no remorse, famously commenting ‘If he dies, he dies.’

Rocky, sorely racked with guilt and anger, desperately needs revenge. He heads out to Russia to train in the mountains and fight Drago on his own turf. Up against the odds, Balboa achieves the impossible. He  succeeds in defeating Ivan Drago, winning over the hostile crowd in the process. Let’s get one thing straight: this is Hollywood. Rocky Balboa was in the wrong. He should have dropped the towel and let Creed’s pride take a hit. Balboa let his friend die and there is no coming back from that. Beating Drago in a revenge match may bring some sense of justice but the responsibility still lies with Balboa. We can also make the case that just as Creed shouldn’t have fought with Ivan Drago, nor should Balboa, despite all his training and despite the victorious outcome. Of course, that may not have made for a very exciting movie. Hollywood is filled with such underdog stories and they make for enjoyable viewing but we must remember that if you fight the odds all the time in the real world, they’ll eventually catch up with you. (1)

Here we have one of the most important learnings from the game of trading: process trumps outcome over the long-term. It is because of this idea that I am making the decision to throw in the metaphorical towel. For all intents and purposes, my trading life is over. It was inevitable.

Just as we should consider the alternative outcomes that never materialised in Rocky IV, so we must do the same with our trading. I know that I have died many a death in the alternative histories that never happened but that could have happened had the gods of chance not been so generous with the roll of the die. My capital is pathetically low (an affliction suffered by most traders) and I wanted to build up my equity to the stage where I could enact the right trading processes. I knew it was only then that I could start trading properly. But the paradox is that in order to get there I needed to take outsized risks to build up the capital in the first place. It was a classic catch-22 situation, one where I had to follow the wrong path to get to the right path. I crashed and burned, worked my back up, burned again, and partially recovered. But it is not sustainable. I cannot keep on fighting the Drago. It is not healthy and conducive to practising the virtuous life.

My passion for the financial markets remains undimmed but this is my last blog post for the foreseeable future. I hope it serves as a useful record of a solitary trader’s efforts. The journey has been worth taking in every respect and I thank you all.

In this section, I compare my trading life with that of the real Caravaggio.

Caravaggio the artist lived from 1571 to 1610 and what a life. He was a supremely gifted painter but Caravaggio was not a nice person to be around. Rebellious to the extreme and prone to outbursts of excessive aggressiveness, Caravaggio was always getting in trouble every where he went, trouble that would often included a burst of violence along the way.

I don’t model myself on this guy but there are similarities. My antics in the market place were often akin to Caravaggio’s pointless brawls and arguments, usually ending with me the worse for wear and filled with gloomy self-loathing. By the time I started this blog I felt I had a much better control of my emotional trading faculties, but just as Caravaggio was left badly wounded after he fought and killed Ranuccio Tommasoni in a knife-fight in Rome, I too was left with permanent scars from these pointless battles. These tumultuous events were pivotal in both lives. The artist had to flee to Naples as the authorities in Rome had put a price on his head (a pena capitale). In my objective mind I knew my days in the trading arena were numbered, but I tried to run from this reality. Caravaggio the artist continued to paint. I continued to trade. The lives we made for ourselves caught up with us both.

The desperate search for redemption is another tie that binds. Caravaggio, somehow hearing that Rome was likely considering granting a pardon, made his way back to Chiaia in Spanish Naples, where it his thought his first patroness may have been able to help in influencing the papal authorities in Rome to issue to the pardon on his behalf. Alas, it is here that the artist was so brutally attacked and mutilated by unknown assailants that word spread of his death. In Simon Schama’s ‘The Power of Art’, Schama notes that Caravaggio stayed in Chiaia and kept painting. He says of these paintings they ‘were images of redemptive suffering and, yet again, decapitation, as if he couldn’t get the image of his own pena capitale, his capital sentence, out of his mind.’ My brush with death came this February, and it was a dangerous one. My self-loathing hit a new high, made worse that the fact that my capital sentence (a shortage of capital) was of my own making. I equated redemption with getting back to break-even – this would be my pardon from Rome – but I now realise that it is not here that redemption lies. It lies in being true to oneself and stopping now.

David with the Head of Goliath, 1610

It is during Caravaggio’s time at Spanish Naples that he painted David with the Head of Goliath, pictured above (2). The painting is widely thought to be a form of double-self portrait; at the very least the decapitated head is surely Caravaggio’s. As with almost all art, the exact meaning of the piece is open to interpretation but right now the message that resonates with me is one of a deep understanding of the self, of the idea of redemption by making a clean break of the troublesome Caravaggio of old, and lastly, there is a heap load of self-loathing (see David’s disgust with what he is holding). Schama says of this painting, ‘You see something that had never been painted before and would never be painted again: a portrait of the artist as ogre, his face a grotesque mask of sin’, describing the young slayer of the giant Goliath as the ‘most conflict ridden David ever to be imagined in either marble or paint.’ I can relate. There have been times when I felt like David and the market was Goliath, and other times when the market seemed the true David and I the ogrish Goliath, but the long standing truth is closer to idea of the double self-portrait, that I am both characters, and that today I officially severed the wicked head of my alter-ego (3). There will be no more half measures.

Rebirth denied – Caravaggio met with a tragic end. Still seeking redemption but now with a pardon apparently on the way, the artist boarded a boat for Rome, taking with him a collection of paintings he intended to give to people of influence and win favour. However, when the ship pulled in at the port of Paulo he was arrested for unknown reasons. By the time Caravaggio got out of jail the ship had sailed off with his paintings still on board. Some think that Caravaggio actually saw the ship sailing away and that, in a frenzy, he gave chase. What we do know is that Caravaggio made it as far as Port Ercole but there he collapsed on a beach with severe fever. In this pitiful state, he was taken to a local hospital where the troubled artist died. So near and yet so far.

As with Caravaggio’s near redemption, my ship has also sailed (4). In the place of the important payload of valuable paintings are valuable trading secrets that could lead to success in the market. These are the product of several years of relatively intense trading and they will stand me in good stead when and if I ever return to trading with a reasonable level of capital. Of course, they are not secrets of the ‘key to riches’ variety, simply crucial lessons that I noted from my experiences trading the markets. My full-time trading career is over. I still plan to trade in extremely small size, seeding my two trading accounts with £500 each, but this is only to maintain an active in the markets until the day I am ready to return, if ever.

Saint Jerome in Meditation, 1605

These introspective paintings of Saint Jerome and Saint Francis touch on ideas of contemplation of the self, mortality, and man’s role in relation to the world. It is apt to end with a famous quote by Socrates:

‘The unexamined life is not worth living.’

Saint Francis in Meditation, 1595, Saint Jerome Writing, 1607, Saint Francis in Meditation, 1603

The End

(1) Later Rocky films address this issue, with the writers giving Rocky Balboa permanent brain damage as a direct result of the thunderous blows delivered by Ivan Drago. Rocky also experiences a humbling of his financial status that forces the boxer to give up his extravagant high-life and return to his old neighbourhood.

(2) Wikipedia observes the letters H-AS OS inscripted on David’s sword, an abbreviation for the latin phrase ‘Humilitas occidit superbiam’, or ‘humility kills pride’.

(3) The non-Caravaggio me lives on here.

(4) Given my chosen trading name of Caravaggio, the question of whether I subconsciously expected this fate hangs over me. Fortunately I don’t delve that deep.

BadBeat poker prop shop and trading the markets

If you were unsure about the similarities between poker and trading, take a look at this interesting article about a metals trading prop shop in London that has started a business backing on-line poker players. Here are some quotes from the piece:

Although online poker sites do not announce what proportion of their customers actually win money, professionals estimate that about 95 per cent of players lose.

Daily loss limits are seen as the cornerstone to developing profitable players. Losing your daily loss limit three times means you move down to playing with half that amount until the gods smile on you again.

The hours a player puts in are also vital to making money. Over time, good players will beat bad players, but luck is a factor. “The one thing employing people to play has highlighted is how little most player play,” says Conroy. “Considering it’s a game of skill and luck, you need to put the time in for the skill to show through.”

How much money do you need to play poker? …when it comes to bankroll, most people don’t have enough. The principle is never go broke. Being well bank-rolled means you never play with ‘scared money’. BadBeat’s John Conroy believes most players (probably 80 per cent) are under bank-rolled. They’re also playing at higher stakes than they should. To play $5-$10 no-limit hold ‘em efficiently you’ll need $40,000 to avoid running out of money after a month’s bad run, with a daily loss limit of $2,500.

In poker, a ‘bad beat’ is when you lose a pot against the odds – a strong hand beaten by a lucky one. The response? You just have to play more hands.

Source – ‘Dealer’s Choice’, FT Weekend Magazine, Septemeber 20/21 2008

Bloodsport teaches trading

bloodsport-van-damme.jpg

In my all time favourite Jean Claude Van Damme film, Bloodsport, JCVD travels to Hong Kong to fight in the Kumite, a legendary, underground fighting tournament that takes place once every four years.

This piece of cheesy dialogue is highly relevant to trading:

Journalist: Why is it that no one will talk about the Kumite? What is this air of mystery? (pause) Why are you fighting in it?

JCVD: It’s personal.

Journalist: You want to prove your manhood to the world?

JCVD: The Kumite is for the fighters, not for the people who read the newspapers.

Lesson: Always remember your motive.

In this clip, JCVD is through to the the final, where he fights Kumite champion Chong Li. Note that Bolo Yeung (the actor who played Chong Li), was 49 years old when Bloodsport was filmed.

Some quotes to think about

I recently added some quotes to my collection that have a relevance to man’s endeavours, trading included:

The strongest oak tree of the forest is not the one that is protected from the storm and hidden from the sun. It’s the one that stands in the open where it is compelled to struggle for its existence against the winds and rains and the scorching sun. – Napoleon Hill

Never confuse a single defeat with a final defeat. – Winston Churchill

Never give up, never give in, and when the upper hand is ours, may we have the ability to handle the win with the dignity that we absorbed the loss. – Doug Williams

Never mistake activity for achievement. – John Wooden

There are some defeats more triumphant than victories. – Michel de Montaigne

There is no elevator to success. You have to take the stairs. – Author unknown

What you risk reveals what you value. – Jeanette Winterson

What we obtain too cheap we esteem too little – Thomas Paine

Some desire is necessary to keep life in motion. – Samuel Johnson

Some have been thought brave because they were afraid to run away. – Thomas Fuller

Risky cravings

“When you are threatened with extinction, you act like nothing matters,” said Andrew Lo, a professor at M.I.T. who has studied the role of emotions in trading. Mr. Kerviel, he said, is a case study in loss aversion.

“The best traders are the ones who have controlled emotional responses,” Mr. Lo said. “Professional athletes have the same reaction – they use emotion to psych them up, but they don’t let those emotions take them over.”

‘Craving the High That Risky Trading Can Bring’ – New York Times

Trading quotes

And the great sea with its friends and its enemies. And bed, he thought. Bed is my friend. Just bed, he thought. Bed will be a great thing. It is easy when you are beaten, he thought. I never knew how easy it was. And what beat you, he thought. ‘Nothing’, he said aloud. ‘I went out too far.’

– Hemingway, The Old Man and the Sea

‘At that point I ought to have gone away, but a strange sensation rose up in me, a sort of defiance of fate, a desire to challenge it, to put out my tongue at it. I laid down the largest stake allowed – four thousand gulden – and lost it. Then, getting hot, I pulled out all I had left, staked it on the same number, and lost again, after which I walked away from the table as though I were stunned. I could not even grasp what had happened to me.’

– The Gambler, by Fyodor Dostoevsky

If you must play, decide upon three things at the start: the rules of the game, the stakes, and the quitting time.

– Chinese Proverb

Luck never gives; it only lends.

– Swedish Proverb

Depend on the rabbit’s foot if you will, but remember it didn’t work for the rabbit.

– R.E. Shay

More insights from ‘Into the Wild’

In an interview about the making of ‘Into the Wild’, Emile Hirsch talks about losing weight for the main role. His comments will resonate with speculators who have suffered large losses of trading capital:

“By the end I was down to 115 pounds,” says Hirsch. “I had no energy at all. It changes everything about you: the way you think, the way you treat others, the way you are alone.”